India, Saudi Arabia To Speed Up Kingdom’s $100-Billion Investment Plan

India and Saudi Arabia on Monday outlined steps to expedite Riyadh’s long-gestating plan to invest $100 billion in the country, including a mega refinery, as Prime Minister Narendra Modi and Crown Prince Mohammed bin Salman explored ways to bolster cooperation in areas ranging from energy to defence.

The crown prince, also the kingdom’s prime minister, began a day-long state visit after participating in the G20 Summit over the weekend. The Saudi leader was accorded a ceremonial welcome at Rashtrapati Bhavan before he and Modi co-chaired the first meeting of the Strategic Partnership Council, the apex body to oversee bilateral ties that was set up in 2019.

“Saudi Arabia is one of the most important strategic partners for India. As the world’s two largest and fastest growing economies, our mutual cooperation is vital for the peace and stability of the entire region,” Modi said at the meeting, speaking in Hindi.

“We together made a historic beginning to establish an economic corridor between India, West Asia and Europe,” Modi said, referring to the launch of the India-Middle East-Europe Economic Corridor (IMEC) during the G20 Summit. An agreement was signed by India, Saudi Arabia, the European Union, the United Arab Emirates (UAE), the US and other G20 partners for the corridor, which Modi said will enhance economic cooperation, energy development and digital connectivity.

The Saudi prince too referred to IMEC and said the partners will have to “work diligently in order to create it into a reality”. He added there was no disagreement in the history of India-Saudi Arabia relations, which are based on cooperation to create opportunities.

“Today we’re working on future opportunities. There is a huge agenda to be working with. We are working through this council to achieve these accomplishments, and these are promising,” he said.

The two countries agreed to set to set up a joint working group (JWG) to streamline and channelise the $100 billion in investments promised by the Saudi side during the crown prince’s last visit to India in February 2019. Of this, $50 billion was earmarked for the West Coast refinery, a mega plant to be set up by Saudi Aramco, Abu Dhabi National Oil Company (ADNOC) and Indian firms.

“Both sides extended their full support to the early implementation of the West Coast refinery project,” Ausaf Sayeed, secretary (overseas Indian affairs) in the external affairs ministry, told a media briefing. Besides the JWG on investments, there will be a specialised monitoring committee to ensure progress in the refinery project.

Sayeed acknowledged there had been delays since the refinery was announced in 2018 due to various factors, including the Covid-19 pandemic. “The whole idea was that a JWG or a committee would go into all facets of this and then see ways and means of expediting this,” he said.

The two leaders instructed officials from India’s petroleum ministry and the Saudi energy ministry to identify factors hindering the early implementation of the refinery.

Reports have suggested the refinery, expected to produce 1.2 million barrels a day, has been held up because of challenges in acquiring land in western Maharashtra. The stakeholders have explored the option of splitting the mega plant into several refineries.

During the meeting, Modi suggested areas for potential Saudi investments, including waterways, ports, expansion of railways and freight corridors, highway infrastructure, energy, hydrogen, and gas grids.

The two sides agreed to expedite negotiations for a free trade agreement (FTA) between India and the Gulf Cooperation Council (GCC), which Sayeed said could act as a catalyst for economic cooperation. The negotiations were delayed because of the change of GCC’s chief negotiator and there is keenness on both sides to complete the pact as early as possible, he said.

The two sides signed eight agreements, including one inked by the energy ministers to expand the hydrocarbons relationship into a comprehensive energy partnership. This agreement will cover renewable energy, petroleum, electricity, green hydrogen and strategic petroleum reserves.

Saudi Arabia is currently India’s third largest supplier of energy and supplied crude oil worth $29 billion during 2022-23. The kingdom, however, was overtaken last year by Russia, which emerged a key energy supplier by providing discounted oil after the Ukraine war.

The other agreements covered digitalisation and electronic manufacturing, cooperation between India’s Central Vigilance Commission and the Saudi Oversight and Anti-Corruption Authority, the national archives, Invest India and the Saudi investment ministry, the exim banks, and SIDBI and the Saudi SME Bank.

Another agreement covered seawater desalination, including cooperation in future technology, exchanges of investment and expertise and joint research.

During their meeting, the two leaders focused on cooperation in energy, defence, security, technology, transportation, healthcare and education, and identified space and semiconductors as new areas of collaboration. Sayeed said the two sides are also eyeing cooperation in fintech and trading in national currencies, for which proposals and concept notes have been exchanged.

The leaders expressed satisfaction at the current volume of trade, which has been in the range of $30 billion a year, with India as the kingdom’s second largest trading partner and Saudi Arabia as India’s fourth largest trading partner. Modi laid emphasis on new sectors such as critical minerals and food parks, and suggested the creation of a JWG on education and skill development.

Modi also mentioned that, depending on capacity, Saudi Arabia could consider accommodating more Indian pilgrims for the annual Haj. India’s current quota for the Haj is 175,000.

The Indian government has focused on enhancing security and energy ties with West Asian states, especially the UAE and Saudi Arabia, which is home to 2.2 million Indians – the largest expatriate community in the kingdom. Modi pointed to the large number of Indian workers and thanked Saudi Arabia for helping them during the pandemic.

The Saudi crown prince noted that 7% of the kingdom’s population comprises Indians, who play a large part in the country’s economic growth. “We consider them to be a part of Saudi Arabia. We watch and take care of them like we take care of our own citizens,” he said.